Valuation of Western Insurance_2 (A reader, WAPO mentioned in the comments section of the Dempster Mill Post that Chapter 3 ofDeep Valuedidn’t include Warren Buffett’s other early investments like Western Insurance, Genesee Valley, Union Street Railway, American Fire Insurance, and Rockwood. Does anyone wish to dig these investments up from somewhere? Just post in the comments section and/or I can post your work for the readers.

In the Dempster Mill Post we learned that Buffett succeeded in this investment because he:

Most importantly and in deference to Graham, he bought well--he started paying $18 in 1956 for Dempster with its $70 per share of book value and $50 of net working capital per share. He bought right. Note in the video lecture above, Buffett mentions that he paid 1/3 of working capital for a windmill company (probably Dempster).

Then he was patient. This investment was held for at least seven years.

Finally, he had Harry Bottle to turn the business around.

Thanks for the intelligent and thoughtful comments on Dempster. We learn from the questions and thoughts of others.

Perhaps his success in Dempster Mills lured him to buy Berkshire Hathaway?(considered by Buffett to be his worst investment)

Next we will review See’s Candies, Sanborn Map. We will focus on Buffett’s writings in his shareholder letters on valuation. See the The Essays of Warren Buffett above.

For new investors you may feel frustrated by the lack of clear rules. Net/nets depend upon reversion to the mean before total value destruction, but franchises manage to repel the forces of competitive entry for longer than investors expect. Early, fast growing franchise companies like Wal-Mart (in the 1970s) or Costco trade at what appear to be sky-high multiples of earnings (30+) yet the market is UNDER-pricing the profitable growth of those companies. There seem to be grey areas. Congratulations, we are making progress. And for experienced investors, we can never reread the writings of investment greats like Graham and Buffett as many times as we should, but it may seem like